‘We thought differently about the market for our German branch’

About 50% of Dutch tomatoes are exported to Germany. But Germans prefer tomatoes that are grown in their own country. So what could be more logical than to produce them there? But it’s not that simple. Producing in Germany is certainly educational and it at least offers more potential than in the Dutch tomato sector.

Under the leadership of Pieter van Gog and his sister Marion Leenders-van Gog, Dutch nursery Van Gog Kwekerijen has over time expanded to 37.5 ha of glasshouses. Originally they were tomato growers but they have also expanded into cucumbers to spread the risk. At the original site in Deurne, where their mother and father started the business, they still grow 1.6 ha of strawberries.
Both are strongly driven to start up new enterprises. “I get bored if everything stays the same,” says Marion Leenders. Even before 2000 they considered starting something in Germany instead of building another new nursery in the Netherlands. But that proved quite difficult so they went on to build new nurseries in the Netherlands. They now have four sites in Asten, Helmond, Horst and Deurne. Thanks to the work of tax specialist Wichard Schrieks, who is well acquainted with the German rules and regulations, the nursery in Germany started operating three years ago. Schrieks is also a joint owner.

Chauvinism

Wittenberg Gemüse GmbH is located in Saxony-Anhalt, between Leipzig and Berlin, about 600 km from their businesses in East Brabant. The company has 15 ha of glasshouses and grows medium-sized vine, cocktail and snack tomatoes. For legal purposes it is run independently from van Gog Nurseries. The three owners travel up and down in turns so there is usually always someone present who can make decisions.
The reasons for producing in Germany are clear. Pieter van Gog: “A lot of our produce is sold in Germany. In terms of transport you are much closer to the market. Also, you are always vulnerable as an export country. We saw more future in expanding there than building another nursery in the Netherlands.”
Schrieks adds: “Germans are more chauvinistic than the Dutch. Actually you can divide the consumers into three groups: one group only wants German product, another group prefers German product and for the third group it doesn't make any difference. It differs by region and by income group but there is definitely potential because less than ten per cent of the demand for greenhouse vegetables is fulfilled by that grown in Germany. Therefore it is a very big growth market.”
There is another aspect, says Leenders: “The Netherlands has become the bulk country in Europe.” It is even difficult to achieve decent prices with specialties. That is different in Germany confirms Schrieks. “So far we are very satisfied,” he says.

Choice of location

Three factors played a role in the choice of location: Energy; labour; and funding opportunities. “The aim was to achieve an acceptable cost price,” says Leenders. The first point — the energy – was the biggest challenge. “You have to deal with the Energy Transition, the switch over to green energy which Germany wants to achieve. That is why the government is subsidising the generation of green power. The down side is that all energy and gas consumption is subject to an extra tax,” says Van Gog. “That means you can't compete on energy costs compared to the rest of the world, unless you manage to find a location where you don’t have to take into account the energy taxation. That brings to you geothermal or waste heat.”
This is the main reason why the company is such a large distance from the Netherlands. In Wittenberg there were opportunities to simultaneously utilise waste heat and CO2 from an industrial company, SKW Stickstoffwerke Piesteritz. However, it was still not so simple to do business with such a big company, says Schrieks.

Financing

Availability of labour is not a hurdle. Management and middle management positions are filled with a mix of Germans, Dutch and Polish. Polish employees work mainly in production and packing. For the third factor – financing – the entrepreneurs turned to a Dutch bank. German banks are not keen to finance greenhouse horticulture. It is unknown territory and they have negative experiences with large-scale projects in Eastern Germany.
“The Rabobank is in favour of the concept ‘local for local’. But because the investment takes place abroad, the conditions are more stringent than for a Dutch business, i.e. a shorter duration and more of your own equity,” says Leenders.
They commissioned a Dutch greenhouse builder and the equipment and installations also come mostly from the Netherlands. Likewise Hagelunie who is the insurer. “German insurers are not comfortable in this matter," she says. But the glass does come from Germany. “We found a manufacturer based in Saksen-Anhalt that produces high light transmitting glass, even in the range between 400 and 700 nm,” adds Schrieks.

Luther Tomatoes

Wittenberg is the town in which Maarten Luther nailed his theses to the church doors and thereby initiated the Reformation, the origin of Protestantism. To emphasize the region of origin, the products are sold under the protected brand name Luther Tomatoes. This makes them easily recognised.
The company delivers directly to the supermarkets’ distribution centres. Smaller customers, such as fruit and vegetable stores, market vendors as well as restaurants and caterers collect the products themselves. Through these experiences with direct sales, they started to think very differently about the market, says Van Gog: “In the Netherlands expansion occurs far too quickly without clearly knowing who is going to buy the extra produce. Because we are much closer to the market in Germany, we have learned a lot about that. For example, if you supply a vegetable shop with 30 kg of tomatoes per week, and your yield is 300 tons you need 10,000 of such shops! No one in the Netherlands would give that any thought. We often think: what does an extra 10 ha of glass matter? But the issue of overproduction only favours the customer,” he says.
As a grower you only feel the market when you have to sell the product yourself, says Van Gog. “We must learn to think differently: the market is often smaller than you think. We are now very reluctant to expand further in the Netherlands. “The margins have become much too small to further invest there. On the other hand, we still see possibilities in Germany.”

Health & Safety

It has not all gone smoothly but that has been good, they say. Otherwise everyone would immediately jump in. The regulations are strict and in some cases are quite different to the Netherlands. You have to deal with occupational health and safety requirements (including working conditions), construction, fire safety, land use planning amendments and nature development. As the owner you have to do all the research on the property yourself and take any compensatory measures. They have planted a wood, cleaned the ground and moved salamanders to a new habitat.
The three speak positively about the collaboration with the town. “The mood was always positive. They are interested in new businesses because it means additional income from taxes such as the trade tax. Furthermore, the concept - utilisation of waste heat - was also interesting to the council,” concludes Schrieks.

Summary

Dutch brother and sister Van Gog together with tax advisor Wichard Schrieks have set-up a tomato nursery in Eastern Germany. Due to the strict regulations starting up a new company there is far from easy. Despite this these entrepreneurs see more potential in 'local for local' production rather than further expansion in the Netherlands.